EagleTribune.com, North Andover, MA

November 1, 2012

Storm not expected to impact gas, fuel oil prices

By John Toole jtoole@eagletribune.com
The Eagle-Tribune

---- — Sandy likely won’t hurt drivers at the pumps.

“Assuming a smooth restart to production and distribution following Hurricane Sandy, AAA expects that gas prices across the country will continue to drop leading up to Election Day and will move even lower approaching the end of the year,” AAA Northern New England spokesman Patrick Moody said yesterday.

Moody acknowledged the next week or two could prove challenging for fuel production, but drivers should be in a better place the rest of the year

“There is still the expectation that gasoline prices should continue to trend lower over the next couple of months in nearly all sections of the country,” Moody said.

Some industry analysts yesterday were predicting higher prices at least temporarily in the New York metropolitan region that took a major hit from Sandy.

Prices for a regular gallon of gas yesterday in New Hampshire ranged from $3.58 a gallon in the Portsmouth area to $3.63 in the Manchester area in the daily survey by AAA. Those prices are actually down from $3.66 and $3.70, respectively, a week ago.

The Massachusetts statewide average for regular gas was $3.72 a gallon, down from $3.78 last week in AAA figures.

Two of the six Northeast refineries, as well as many distribution terminals, closed temporarily because of Sandy. The other four refineries operated at reduced rates.

But there was some good news.

“Early reports following Hurricane Sandy indicate that damage to the regional refineries is minimal,” Moody said.

Demand also will play a role in gas prices. While reduced production and storm concerns were pressuring gas prices, offsetting factors included motorists staying off the road and flight cancellations by airlines.

“This drop in demand has the potential to pressure pump prices lower,” Moody said.

There were isolated reports of individual gas stations up and down the coast running out of gas, Moody said.

Neil Niman, chairman of economics in the University of New Hampshire’s Whittemore School, said Sandy could affect home heating oil prices, too.

“It depends on the status of the refineries and how quickly they get back up,” Niman said. “The issue is capacity, not supply. It would create a temporary blip at most.”

A spokesman for the U.S. Energy Information Administration, John Cogan, said the federal agency is still reviewing the impact of Sandy on the oil production and delivery infrastructure. That will come before a market assessment.

“It’s too early to tell,” Cogan said.

The agency may issue a preliminary assessment as soon as today.

The New Hampshire Office of Energy and Planning pegged the price of home heating oil at $3.80 a gallon on Monday. The Massachusetts Energy and Environmental Affairs posted the average price at $3.98 a gallon as of Oct. 23.

Still to come for consumers would be the effect Sandy might have on long-term utility bills.

The New Hampshire Public Utilities Commission would consider storm costs and whether they can be passed along to consumers.

Unitil spokesman Alec O’Meara said the company hasn’t estimated costs associated with Sandy yet.

“Speaking generally about the process, well after the storm has passed, a utility submits a report to regulators that includes all costs associated with restoration – the hours, food and lodging for the additional resources brought in to address the emergency conditions, for instance,” O’Meara said.

Regulators then review costs and determine whether to adjust rates, typically spreading the cost over several years to lower the impact on consumers, he said.

But any potential rate increase would be affected by other factors.

“Even if the PUC were to issue such an order, it is possible customers may not see a bill impact, as the declining costs of natural gas have been the chief driver of energy rates over the last few years and that trend has been downward,” O’Meara said.